The Bangladesh Tariff Commission has recommended offering textile and clothing makers a reduced rate of cash incentives against export proceeds instead of value addition, sources said. The recommendation also included reduction in existing 4.0 per cent rate without changing the allocation, they said. The government’s financial involvement should also be taken into consideration while providing such incentives, the commission said. Currently, knitwear manufacturers and exporters get 4.0 per cent cash incentives against the value addition of products manufactured in the country using the local yarn. The move came following the demands from the leaders of the country’s knitwear sector who alleged that they are facing harassments while getting the financial support. In a recent meeting, the commission opined that cash incentives could be allowed for the knitwear exporters against free on board instead of value addition as the exporters claimed there was no realistic methodology to determine the value addition of products. In a letter to the commerce ministry, the commission made the suggestion for reviewing the rate of cash incentives from the present 4.0 per cent remaining the government allocation unchanged. A commerce ministry official said they received the recommendation from the tariff commission but the ministry is yet to take any decision on the issue. Md Hatem, a former vice president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) in the meeting demanded setting the cash incentives at the rate of 3.2 per cent against FoB price instead of current 4.0 per cent in relation to value addition. According to the government circular, knitwear exporters get 4.0 per cent cash incentive against the value addition of products but the process of determining the percentage for value addition is cumbersome, he explained. Exporters have been facing hassles in realising the cash incentives against value addition due to ambiguity between the circulars of Bangladesh Bank and other government agencies, he noted. According to the resolution of the meeting, currently the knitwear exporters are getting cash incentive at the rate of 4.0 per cent of 80 per cent of FoB price. In the meeting, commission member Abdul Kayum said that the decision on cash incentives against FoB price might encourage exporters to collect export orders with high value. Opposing Mr Kayum’s remarks, Mr Hatem said that amid the tight competition on local and global markets, it is “very difficult” to receive export orders with the level of breakeven price and there is no scope for over invoicing. If it does not involve any additional government expenditure, the proposal for cash incentives against FoB price could be allowed, said Md Arafat Ali, deputy director of the central bank.
